Thanks, Government — Nearly Half of Puerto Rico Is Still without Power

In the wake of Hurricane Maria, most of Puerto Rico lost electricity. Since electronic transactions were not longer possible under these conditions, the Federal Reserve was forced to fly a planeload of cash to the island [3]to avoid a total breakdown of the economy there.

But even then, we were assured that the loss of power was a momentary blip. Everything would be back to normal soon.

The good news is that the "Army Corps of Engineers has projected that power will be restored for most people by March, but those in very remote areas might have to wait until May because of the difficulty in moving supplies."

So, in some parts of the United States, when disaster strikes, one has to wait only a mere six months to have power restored.

This is partly due, not surprisingly, to the fact that electricity services function under the weight of a government-granted monopoly given to the local power company. It's not as if a competitor can come in and start working with local residents to rebuild the infrastructure. That, of course, is illegal. Besides, it's likely that non-monopolistic electric companies would only be willing to do that at high prices. But that would be verboten also, because it would be labeled "gouging."

Needless to say, under these conditions, the standard of living for many Puerto Ricans is plummeting, and now many on the island fear a surge in crime[5]:

Thirty-two people have been slain in Puerto Rico in the first 11 days of the year, double the number killed over the same period in 2017. If the surge proves to be more than just a temporary blip, January could be the most homicidal month on the island in at least two years, adding a dangerous new element to the island’s recovery from Hurricane Maria, its worst disaster in decades.

While the number of homicides did not immediately spike in the weeks after the hurricane struck on Sept. 20, police and independent experts say many killings appear at least partly related to its aftereffects.

The storm has plunged much of the island into darkness, increased economic hardship and contributed to a sickout by police, all fueling lawlessness. What’s more, officials say a turf war has broken out among drug gangs looking to grab territory after the storm’s disruption.

Help Is Not on the Way

For many years, Americans became accustomed to the idea that in the wake of any disaster, help would soon come flooding in. Power would be quickly restored and re-building efforts would begin in force.

Over the past decade, however, that narrative has become less and less convincing.

After Hurricane Katrina in 2005, for example, the Federal Emergency Management Agency (FEMA) is now widely regarded as an agency made the situation worse in the storm-affected area —especially in New Orleans.

Moreover, the worst part of the disaster did not come directly from the storm. It came from the failure of levees built by the Army Core of Engineers.

It was a disaster made far worse by the incompetence of government "experts." Yet again, faith in the ingenuity and reliability of federal bureaucrats was rewarded with death and destruction.

After years of decline, it took a decade[6] for the New Orleans population to recover [7]in many areas. In other areas, population has still not recovered, and as is so often the case with natural disasters, lower-income populations have been impacted the most. [8]

Now, more than a decade later, there are still new lessons to learn about the folly of waiting for government help in the wake of disasters.

Puerto Rico's fate provides a couple of grim reminders.

First of all, the lack of power in Puerto Rico reminds us that it's important to always keep extra physical cash in case of emergencies. Economists and politicians who work in shiny skyscrapers in wealthy cities are often quite comfortable concluding that physical cash is no longer necessary. After all, just look at all the wonderful technology that surrounds us! Need to buy something? Just use your iPhone.

Of course, all the wonderful solutions to our problems only work when there is power running to cell towers, and when there's power to charge phones. This should not be assumed even in urban areas, as Puerto Rico has shown us, and this assumption gets even worse as we move into more rural areas. Moreover, without physical cash, the informal economy — which is especially essential in times of disaster — comes to a screeching halt.

And secondly, governments will continue to place obstacles in the way of the private-sector people who are inclined to help.

Back in October, as Puerto Rico began recovery efforts in earnest, some in Washington began to discuss repealing the Jones Act[9]. The Jones Act greatly limits shipping to Puerto Rico (and other domestic ports) by mandating that " all maritime transport between domestic ports to be flagged, built, and manned by the United States."

The Act grants a monopoly to the United States Merchant Marine, and locks out more efficient shipping organizations.

Naturally, the effect of this has been to greatly increase the price of shipping to Puerto Rico.

Last fall, some policymakers — the Trump Administration included — were forced to admit that the Act was stifling the recovery effort. Yet shockingly, many months after the disaster, the Jones Act is still in force.

In the continental United States, of course, recovery efforts are helped immensely by private organizations shipping goods directly to the affected areas — usually by roads. Just imagine, though, that if one wanted to ship clean water to Houston, one needed to do it only through special federally-approved shipping organizations, and only after filling out reams of paperwork.

While it's true that it's impossible to hop in a car and drive to Puerto Rico, the island isn't exactly in the middle of the Pacific, either. A great many American organizations are capable of shipping goods to Puerto Rico all by themselves. But they are barred by federal law.

And, of course, as far as foreigners are concerned, there is no free trade with Puerto Rico, so everything must go through federal bureaucrats to be imported into Puerto Rico. The Island can't unilaterally declare itself to be a free-trade zone.

So, here we are months later, and the United States government continues to squeeze trade and shipping with Puerto Rico while also claiming to be concerned about "helping" the Island nation recover. Maybe more Puerto Ricans will be able to read about it once the other half of the island finally gets electricity again.